GRIMSHAW:
On the first morning, of an undoubtedly busy year in Federal Parliament, Treasurer Peter Costello, joins us now. Treasurer, good morning.
TREASURER:
Good morning Tracy.
GRIMSHAW:
The Prime Minister tells us youll be simplifying the BAS before the next due date in April, can you tell us what changes you have identified as essential?
TREASURER:
I think now that we have moved passed the transition phase we can simplify that form. The first thing I would like to say is that nearly one million, over one million businesses, small businesses actually have filed by the due date, which was on the weekend, and tax agents have another two weeks for small businesses to file. So its been a terrific effort from small business and I pay tribute to the way in which the compliance has occurred, which has been extremely high by any standard.
GRIMSHAW:
Compliance in the face of overwhelming confusion it would seem.
TREASURER:
Well, actually a majority of small businesses say it takes them one to two hours per quarter. Thats actually what came out of it. Now there is obviously some others that have taken longer than that and weve now, with one million returns on the first one, over one million returns on the second one, were now able to sit down and take that experience and do some simplification. In the following areas, for example; on the first ones, because we were moving from a Wholesale Sales Tax System to a GST System, you had to calculate the wholesale sales tax that you had already paid and get it back. You dont need to do that anymore so thats some, one area of the form that can be cut out. It was necessary for transition, it wont be necessary for ongoing. There are other areas, because the BAS statement actually collects things like luxury car tax and wine equalisation tax and people dont need those areas either. So now that weve passed through the simplifications, the transitional stage, you can do quite a lot of simplification on that form.
GRIMSHAW:
Will you drop the quarterly statements as has been widely reported and speculated.
TREASURER:
No, youll always have quarterly payments. You have to have the...
GRIMSHAW:
The quarterly statements...
TREASURER:
...and the money has to actually be paid quarterly and you will always have that. And the quarterly actual payments are really the least reporting requirements in the world. Most countries have monthly, we have quarterly for small business and you will always have a quarterly payment.
GRIMSHAW:
But it could be estimated, couldnt it, and you can drop the statements as they now stand and make them annual, couldnt you?
TREASURER:
Well, thats the point Tracy you cant estimate it, if you have no previous experience. Those payments systems that you have had previously like Provisional Tax, which is an income tax, you can go off past years. But with a GST there is no past year. Thats why it has been necessary to actually get people to calculate the amount that they have to pay and thats why the system has come in as it has.
GRIMSHAW:
So youre saying that youre ruling out now that youll move to a system of annual BAS.
TREASURER:
What Im saying is, you cant move to a system of annual payments and you cant move to any other than quarterly reporting if you have no prior claims guidance to go off.
GRIMSHAW:
Alright, lets talk about petrol prices. It would seem that increase road funding has not necessarily soothed backbenchers claims on this, certainly on the excise hike.
TREASURER:
Well, the investment in roads is $1.6 billion. I think its been very well received in rural and regional Australia. Its the biggest investment that rural and regional Australia have had in roads and if it hadnt been for the excise policy you wouldnt be seeing any of that road building going on. So, people, obviously like roads. The money has got to come from somewhere, it comes in this case from the petrol excise. People, obviously, are concerned about the prices of petrol but the key determinant of the price of petrol is the world oil price. Its the world oil price that you give out every morning and if you want to get those prices down we need to get the world oil price down.
GRIMSHAW:
So, do you simply think that fuel prices will go away as an election issue?
TREASURER:
No. Fuel prices will come down if the world oil price comes down. Fuel prices were much lower in the early part of January than they were in December and with the US dollar, at $30 a barrel theyll still stay high. But if you can get that world oil price down to $25, $26 a barrel again, theyll come off. Its directly tied, the actual price is directly tied to the world oil price.
GRIMSHAW:
Alright, on the issue of economic growth it looks like were not going to make the projected 4 per cent this year. Whats a more realistic figure? What are you tipping?
TREASURER:
Growth in Australia throughout 2000/2001, thats the current year, will be quite substantial. We put out a twice yearly forecast. We put one out in the Budget, and we put out one in the Mid-year review. What we forecast would be 3 - to 4 per cent. It will still be quite, quite substantial throughout the financial year, but one of the factors, there is now going to be a downer, is, the US economy seems to have considerably slowed. Now, we dont know how much it has slowed , well have to wait until that unfolds, but that will have an effect on Australia.
GRIMSHAW:
Most pundits expect a per cent drop in interest rates to be announced today, would that be in line with your expectation.
TREASURER:
Well, the Reserve Bank Board meets today. It will be looking at all of these things. When I became Treasurer I set down the way in which we conduct monetary policy, which is, the Bank makes the decision and the announcement, but we target inflation. We target an inflation rate of 2 to 3 per cent. We are now, because inflation is so low, right down the bottom of that and its that inflation rate that the Bank will be looking at today when it makes its decision.
GRIMSHAW:
Alright, well leave it there. Thanks for your time.
TREASURER:
Thank you.